NOTE: The following press release was sent out Jan. 10, 2003, by the California State University Chancellor's Office after Gov. Gray Davis presented his State of California budget for the 2003/04 fiscal year.

(January 10, 2003)---The state's ongoing budget crisis hit the California State University hard today, as the governor released his proposed 2003/04 state budget with $326 million in reductions for the 23-campus CSU system.

The cuts will affect every aspect of the university system unless there is an improvement in state revenues and additional funding is available, according to CSU administrators.

"We have known for several months that all Californians will feel the pain of this budget crisis, and the CSU is certainly feeling it now," said CSU Chancellor Charles B. Reed. "But we know this: the education, research and service the CSU provides are indispensable to California's future. We are as committed as ever to preserving access for students, maintaining the high quality of our programs, and protecting the outstanding faculty and staff who are the heart and soul of this institution.

California faces a current deficit of nearly $35 billion, according to Gov. Davis.

The governors budget proposal anticipates that the CSUs Board of Trustees will increase student fees in 2003/04 to compensate for $258.5 million of the General Fund reductions. If approved by the trustees, that would equate to a 25 percent undergraduate fee increase, boosting fees by $394 for a total annual undergraduate State University Fee of $1,968. The governor has proposed an accompanying increase in financial aid for eligible students.

The governor specified where some cuts were to be made to the CSUs current general fund budget of $2.6 billion. The reductions and other adjustments are:

On top of the $326 million cut, the CSU must accept an additional $78.6 million in unfunded mandatory cost increases. These increases include unfunded employee salary increases of $32.8 million, of which nearly $30 million is for the faculty; higher health care costs of $32.2 million; insurance premium increases, including worker's compensation, of $7.2 million; and $6.3 million in costs to open new classrooms, laboratories and offices.

One bright spot in CSUs proposed budget, according to Patrick Lenz, CSU assistant vice chancellor for budget development, is an increase of $105.8 million to support 5 percent enrollment growth for the coming year, or roughly 20,000 additional students. The governor's proposal also adds $45 million to partially cover the cost of 10,500 additional students in 2002/03, for which no funding had been previously provided.

A second positive note is that, as a way to improve the economy, the governor also is calling for speeding up construction projects throughout the state, using bond funds approved by voters last year that will fund projects at all 23 CSU campuses.

The next steps in 2003/04 budget process will include the release of an analysis by the Legislative Analyst's Office and a series of legislative budget hearings. In May, the governor will submit a revised budget request based on the forecast of state revenues at that time (known as the "May Revise"). Following completion of hearings, the legislature will then pass a budget bill for the governor's signature. The governor is supposed to approve the budget by July 1, the first day of the new fiscal year, but that deadline has been routinely missed in difficult budget years.

The CSU Board of Trustees will discuss the proposed budget at its January, March and May meetings. Representatives of the CSU also will be presenting their case for increased funding during the various legislative hearings over the next six months.